Investing in U.S. savings bonds is like paying for a part of the American dream. When you invest in bonds, you are actually loaning money to the government of the United States.
Bonds are considered one of your safest investments as well because they are backed by the U.S. government. If the government defaults on bonds, we have some pretty serious problems.
U.S. savings bonds can be great gift ideas. There are 2 main types of bonds and we will examine both below.
EE Savings Bonds:
EE Bonds are reliable, low-risk government-backed savings products that you can use toward financing education, supplemental retirement income, birthday and graduation gifts and simple investments. Series EE Bonds purchased on or after May 1, 2005, earn a fixed rate of return, letting you know what the bonds are worth at all times. These bonds increase in value every month rather than every six months, and interest is compounded semiannually. Finally, these bonds will continue to earn interest for 30 years.
Buying Electronic EE Bonds:
· Sold at face value; i.e., you pay $50 for a $50 bond and it's worth its full value when it's available for redemption.
· Purchase in amounts of $25 or more, to the penny.
· $5,000 maximum purchase in one calendar year.
· Issued electronically to your designated account.
Buying Paper EE Bonds
· Sold at half their face value; i.e., you pay $25 for a $50 bond but it's not worth its face value until it has matured.
· Purchase in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000, and $10,000.
· $5,000 maximum purchase in one calendar year.
· Issued as paper bond certificates.
If you redeem EE/E Bonds in the first 5 years, you'll forfeit the 3 most-recent months' interest. If you redeem them after 5 years, you won't be penalized.
I Savings Bonds
I Bonds were once sold and redeemed solely as a paper security, but now they're also available in electronic form. I Bonds earn interest from the first day of their issue month. The I Bond earnings rate is a combination of two separate rates; a fixed rate and an inflation rate
Buying I Bonds Online:
· Sold at face value; you pay $50 for a $50 bond.
· Purchased in amounts of $25 or more, to the penny.
· $5,000 maximum purchase in one calendar year.
· Issued electronically to your designated account.
Buying Paper I Bonds:
· Sold at face value; i.e., you pay $50 for a $50 bond.
· Purchased in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000.
· $5,000 maximum purchase in one calendar year.
· Issued as paper bond certificates.
If you redeem I Bonds within the first 5 years, you'll forfeit the 3 most recent months' interest; after 5 years, you won't be penalized.
Who can own U.S. Savings Bonds?
You can own U.S. Savings Bonds if you have a Social Security Number and you're a:
· Resident of the United States.
· Citizen of the United States living abroad (must have U.S. address of record).
· Civilian employee of the United States regardless of residence.
· Minors. Unlike other securities, minors may own U.S. Savings Bonds.
Bonds are considered one of your safest investments as well because they are backed by the U.S. government. If the government defaults on bonds, we have some pretty serious problems.
U.S. savings bonds can be great gift ideas. There are 2 main types of bonds and we will examine both below.
EE Savings Bonds:
EE Bonds are reliable, low-risk government-backed savings products that you can use toward financing education, supplemental retirement income, birthday and graduation gifts and simple investments. Series EE Bonds purchased on or after May 1, 2005, earn a fixed rate of return, letting you know what the bonds are worth at all times. These bonds increase in value every month rather than every six months, and interest is compounded semiannually. Finally, these bonds will continue to earn interest for 30 years.
Buying Electronic EE Bonds:
· Sold at face value; i.e., you pay $50 for a $50 bond and it's worth its full value when it's available for redemption.
· Purchase in amounts of $25 or more, to the penny.
· $5,000 maximum purchase in one calendar year.
· Issued electronically to your designated account.
Buying Paper EE Bonds
· Sold at half their face value; i.e., you pay $25 for a $50 bond but it's not worth its face value until it has matured.
· Purchase in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000, and $10,000.
· $5,000 maximum purchase in one calendar year.
· Issued as paper bond certificates.
If you redeem EE/E Bonds in the first 5 years, you'll forfeit the 3 most-recent months' interest. If you redeem them after 5 years, you won't be penalized.
I Savings Bonds
I Bonds were once sold and redeemed solely as a paper security, but now they're also available in electronic form. I Bonds earn interest from the first day of their issue month. The I Bond earnings rate is a combination of two separate rates; a fixed rate and an inflation rate
Buying I Bonds Online:
· Sold at face value; you pay $50 for a $50 bond.
· Purchased in amounts of $25 or more, to the penny.
· $5,000 maximum purchase in one calendar year.
· Issued electronically to your designated account.
Buying Paper I Bonds:
· Sold at face value; i.e., you pay $50 for a $50 bond.
· Purchased in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000.
· $5,000 maximum purchase in one calendar year.
· Issued as paper bond certificates.
If you redeem I Bonds within the first 5 years, you'll forfeit the 3 most recent months' interest; after 5 years, you won't be penalized.
Who can own U.S. Savings Bonds?
You can own U.S. Savings Bonds if you have a Social Security Number and you're a:
· Resident of the United States.
· Citizen of the United States living abroad (must have U.S. address of record).
· Civilian employee of the United States regardless of residence.
· Minors. Unlike other securities, minors may own U.S. Savings Bonds.